You are here:Home/Member News/PETROBRAS TO PAY $853.2 MILLION TO SETTLE FCPA VIOLATIONS

By Richard Montes de Oca*

On September 27, 2018, the U.S. Department of Justice (DOJ) announced the end of its long corruption probe against Petroleo Brasileiro S.A. (Petrobras), a Brazilian state-owned energy company. Petrobras agreed to pay a combined $853.2 million in penalties to resolve an investigation by the DOJ and the U.S. Securities and Exchange Commission (SEC) for violations to the Foreign Corrupt Practices Act (FCPA), as well as an investigation by Brazilian authorities.

The corruption scandal was uncovered in 2014, when Brazilian prosecutors announced their investigation, called “Operation Car-Wash,” into a corruption scheme involving construction companies, including Odebrecht S.A., which were overbilling Petrobras while paying bribes to high-level Petrobras’ executives and to Brazilian politicians. Several high-level executives from Petrobras and the construction companies involved have been arrested by Brazilian authorities.

Since then, U.S. authorities had been working in cooperation with the Brazilian authorities to prosecute Petrobras in the U.S. for violating the FCPA since Petrobras is also a U.S. publicly-traded company. Petrobras faced charges of bribery payments, failure to keep appropriate books and records, and failure to establish adequate internal controls. In its announcement, Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division said that: “[t]his case is just the most recent example of our ability to work with our foreign counterparts to investigate companies and other criminal actors whose conduct spans multiple international jurisdictions.”

Petrobras entered into a non-prosecution agreement with the DOJ and the SEC, so once it pays the agreed criminal penalty, the U.S. authorities will not prosecute the company. The DOJ listed various factors in reaching its settlement with the company, including: the fact that Petrobras is a state-owned company, its full remediation after the scheme was uncovered, and its full cooperation with all authorities. Petrobras also agreed to continue cooperating with the DOJ in the prosecution of individuals for related bribery violations, as well as enhancing its compliance program.

With record-setting fines being levied in the billions of dollars, coupled with the DOJ and SEC’s aggressive enforcement, it is more critical than ever for companies to evaluate their risk of FCPA violations and establish or improve their Anti-Corruption Compliance Programs to mitigate such risks. The attorneys and advisors at MDO Partners have extensive experience advising clients on the FCPA and effective Anti-Corruption Compliance Programs in over 30 countries.

*Richard Montes de Oca is the managing partner at MDO Partners, a boutique law firm that focuses on Corporate, International, and Real Estate Law, as well as Global Compliance and Business Ethics. For more information on MDO Partners, please visit www.mdopartners.com